Monday, March 11, 2024

meme signals, jobs data, the market's weird reaction

“Do you wish me a good morning, or mean that it is a good morning whether I want it or not; or that you feel good this morning; or that it is a morning to be good on?” ― J.R.R. Tolkien ||

Hello everyone! I hope you all got to take a break over the weekend! And for those of you that lost an hour early Sunday morning, I hope you find it soon…

IN THIS NEWSLETTER:

• Confusing employment data

• The strange market reaction

• Meme signals

• March 11, 2004

If you’re not a subscriber to the premium daily, I hope you’ll consider becoming one! You’ll get ~daily insight into the growing overlap between the crypto and macro landscapes, as well as some useful links, and (usually!) access to an audio read of the content. And there’s a free trial!

WHAT I’M WATCHING:

Confusing employment data

In a sea of conflicting information, Friday’s US employment data was even more confusing than usual.

The number of jobs added increased by notably more than expected, but so did the unemployment rate, while the labour force participation rate remained the same. How can this be? On the surface it looks like faulty mathematics – but a closer look at the details outlines a job market that is weakening faster than the big numbers would suggest.

First, let’s look at the headline jobs number: in February, non-farm payrolls grew by 275,000, vs 198,000 expected. That looks strong. But check out January’s payroll increase – you may remember the excitement when it came in at 353,000, almost double expectations. Well, whaddyaknow… now we see it has been revised down a whopping 35% to 229,000. Had that been reported in January, we would have had not the astonishingly strong report everyone celebrated, but a 30% drop in new jobs added.

Here's another twist: as you can see from the chart below, it’s rare for government jobs (red line) to deliver more than 10% of the total increase. In February, they accounted for 20%. This has happened on only two other occasions over the past 17 years: 2020, and 2008, just as the US economy was tipping into recession.

(chart via mises.org)